This product is designed to take advantage of the federal tax credit for electric vehicles (I work in the EV industry) while still maintaining all of the benefits of a lease.
You aren't qualified for the $7,500 federal tax credit if you lease a vehicle, only if you buy. For many first-time EV owners, buying is a big leap of faith. It's a new technology and no one knows for sure where battery tech will be in 10 years. Many drivers would prefer to lease but don't get the tax benefits of purchasing, so instead they decide to stay on the fence.
Last I checked the residuals on S class Mercendes were in the low forty percent. Throw in the funny math needed to get your drive costs down to the five hundred dollar amount and I get less impressed by the minute.
Then to top it off, all with my money too boot! So for everyone who can afford a one thousand dollar monthly lease; before taxes; they get my help to pay for it.
Sorry, he is all in with our help. That isn't exactly courageous. He wants to capitalize on that tax credit before the money ends up elsewhere.
Look, I am all for having an electric car do well, but I would much rather finance the world of Leafs and similar affordable cars than a luxury vehicle to people who could make the payment regardless. People on sites like this bitch up a storm all the time about subsidies to various businesses but somehow this one gets a pass.
A positive corollary is that this kind of consistent, push the envelope behaviour by the founding CEO and the company as a whole draws other ambitious people to the company.
Not only is this story a great business and strategic move, it has an added bonus of marketing/PR/goodwill + hiring benefits.
There's probably a lot we can all learn from the kind of decisions/announcements that are continuously being made from Elon Musk and Tesla.
Except for the fact that the 'monthly payment' is a lie based on fudging the numbers Groupon style. My opinion of Tesla has gone down after reading this and the fine print.
This type of loan used to be quite common but for a completely different reason. Prior to 2005, in many states the owner of the vehicle could be held liable for any damage caused by the vehicle (vicarious liability laws). With a lease, the credit company holds the title, thus for a period of several years, NY and NJ residents were forced into balloon/option loans instead of traditional leases.
It is really interesting to see balloon/option loans coming back, but for a different reason.
As far as I know, no bank does leases and only the captives do them. In this case, you owe wells fargo for the full amount of the loan, but Tesla and Musk are personally guaranteeing to buy the car back. A clever way to create a lease product backed by a company that won't do leases.
Elon Musk is such a great entrepreneur, he could probably make a fortune selling cologne. They could call it, um, well, I'm sure they'll think of something.
2) Is it available for longer than 36-month period?
If I decide to buy Tesla, it's unlikely I'm going to be replacing it in 3 years, more like 6-8 years. And I think that there is a good change that in 6 years resale value will be 0 - with more advanced battery tech available and with cheaper models around, and with old battery Model S may turn out to have no value in 6 years. So this kinda stops me from considering it.
But I don't understand ... if he's personally guaranteeing the put, why is the partnership with the two huge banks necessary? Aren't they just an interchangeable loan provider in this?
This is a high risk high reward gamble by Tesla.
If people take this offer, they are basically getting to lease to own.
Musk is betting that the car will be so good that people will want to keep it.
If it's true, then buyers are getting a great deal and Tesla wins with a lot of cars on the market, and in turn, a lot of leverage to get their charging stations all over the place.
If it's not true, then it all goes to hell over a year period where people are returning them and Tesla is buying them back.
Musk is basically saying "there is nothing better than a Tesla, and I am willing to bet the farm on it."
The way they present this gives me a really bad taste. I think it's ridiculous that the quoted monthly payment includes a business deduction (which, if you're one of the few people it actually applies to, you'd get no matter what car you owned), California tax credits (lower in the rest of the US), savings vs. a 19mpg car figuring $5 a gallon gas (gas isn't that expensive, and my sports coup gets 21 mpg), and the monetary value of the time saved from not gassing up your car! This is just misleading and will turn people away from Tesla. The only thing "new" here is the guaranteed residual value, and other automakers (such as Hyundai) have offered that in the past. I usually have great admiration for Elon Musk and what Tesla is doing, but this is ridiculous and basically false advertising.
Admittedly, it ends up being a lot more if you don't live in California, drive a car that gets a more reasonable MPG, etc. Whether it will turn people away or lead people to doing the research themselves remains to be seen.
the same residual value percentage as the iconic
Mercedes S Class, one of the finest premium sedans
in the world
They make this sound good, but it's not: fancier cars depreciate faster than regular cars. Now, if they offered to match the residual value percentage of a Toyota Corolla, ...
A quick search shows that residual values of S-Class's vary based on model and mileage per year, the numbers I'm seeing are in the 49% to 54% rate. The base price of the 60kWh model is $73,070, so assuming they don't include the federal incentive when calculating the residual value, they'd buy the vehicle back from you at ~$36.5k.
Edit: Based on DanielStraight/Tesla's numbers below (43% RV) that'd be a residual value of $31420 on the base model, with a penalty of $0.25 on each mile over 36k.
This product kind of sucks for the consumer, but it's great for Tesla--and it's is the best that Tesla can do due to their shortage of cash and the risky nature of electrics.
The main advantage of a traditional lease is an extremely low monthly payment: the lessee only pays for the depreciation on the car plus interest on the entire purchase price.
Tesla's product does not offer this, because it's simply a five year loan. Rather than for paying for 40% of the car over three years, you pay 100% over five, so the monthly payment will be roughly 50% more than with a real lease.
Why can't Tesla offer a real lease? Because no bank wants the risk on fundamentally new type of car. Normal leases are financed by banks with the car as collateral at the end of three years; this allows the bank to take the risk of much lower principal repayments over the first 36 months. Usually the car's residual is struck low enough to make this a good deal for the bank. However, banks balked at taking the Tesla Model S as collateral, because there's extreme uncertainty about how valuable these cars will be in three years--for example, if there's a breakthrough in battery technology, or if the batteries themselves don't last very long, or the car proves unreliable for other reasons, the final collateral could be worth much less than estimated.
Ideally Tesla would sell the cars to themselves, claim the $7500 tax credit themselves, and pass the savings onto the lessees via lower lease rates, essentially acting as their own bank (many car companies do this, like Nissan with their LEAF and Ford with the Focus Electric). However, Tesla doesn't have the cash or assets to do that. They need to put all of their cash into operations and can't loan it out, and they don't have enough profit for them to take advantage of the tax credit.
So who takes the risk? The customers. They must make 1.5x higher monthly payments even if they plan to sell the car back, and they're taking a risk that Tesla (or Elon) will be around in three years to honor the buyback price. Furthermore, customers cannot sell the car or the guarantee is lost; it's not transferable to a new owner. Tesla is gambling that they'll have the cash to honor the buyback prices even if the car turns out to have massively depreciated. If the car depreciates massively, Tesla may not be around anyway, so it's a good risk for the company. Likely the residual value is struck low enough (~45%) that they can probably resell the cars without a loss in the expected case, even though that number is still too risky for banks to go for.
Kudos to Elon for personally guaranteeing the resale value; that takes some cojones.
The more you see funny financial manipulation associated with a product, the more you can infer that the product is doomed as a product. It's not clear that Tesla can genuinely manufacture its cars at a profit.
I love Tesla, I love Elon Musk, but this unsettles me. It is unusual for a company so young to start pushing sales via financing. More so when the package includes a 3y repurchase obligation.
Start with Elon Musk personally backing the repurchase agreement. Was the bank unwilling to to take this risk? Why could they believe they can't securitise the risk? Granted this is U.S. Bancorp and Wells Fargo we're talking about. Will the risk live on Tesla's balance sheet? The silver lining would be the clarity investors will get into the assumptions that went into pricing the put.
Why we are already talking about financing? Wasn't the plan to improve accessibility by driving down prices through increasingly mass market models? Who is the marginal customer who balked at the cash price but is shifted by this? The one who doesn't have the cash? Or couldn't get a bank loan? These customers are probably less credit-worthy than Tesla's cash customers. The repurchase agreement is a callable loan to borrowers willing to fund a large discretionary purchase with debt. This will come home to roost if U.S. growth and thus incomes tank and erstwhile enthusiastic greenies start seeing their vroom vrooms as piggie banks.
We know that part of what pushed Tesla into profitability was its re-working of its DoE loan. Is this a way to pull forward sales? How are these "leases" accounted for when they're made? I'm keeping an eye open for if they recognise the full value of the sale, less an ignomiously small loss reserve, upon signing.
Comparatively minor but still irking me: why is Elon Musk implying his credit is better than Tesla's? Tesla has more loss-absorbing capital. Given the amount of Musk's net worth tied up in Tesla, his credit has a high correlation with Tesla's. I get that this is more a marketing stunt, but the emptiness is disappointing. Then again, I would have probably railed at Steve Jobs in 1998, too.
The bank is going to charge Tesla for a repurchase option, but if Elon makes it himself no charge to the company. If Elon really believes in his product then that option is one that will never get taken up, thus costing him nothing.
The press release is rather odd. Under the section "How it works" there are five bullet points, but only two of them (arguably three) actually describe how it works.
The guaranteed buyback is the special sauce here. So I'd want to see exactly what's involved. Are there lease type conditions on miles driven? Exorbitant charges for minor damage? The small print is rather important.
As for lining up banks to agree to financing subject to approved credit, it's fairly meaningless. Someone will always lend you money subject to approved credit.
I love Mercedes and am loyal to the brand, but those familiar know that the S and similar autos in its segment have pretty low residuals. This is due to many things, like the fact that the cutting-edge tech on those cars can be very expensive to replace or maintain as the car ages
Yes Mercedes S class has pretty poor residuals for a number of reasons. Firstly, most are leased so there's a flood of 3 year old S series always hitting the market. Secondly, Mercedes is just not that good at tech. My last BMW lease was 61% residual after 3 years.
well, it's not because of its cutting-edgeness, but because of the insane margins on replacement parts. mercedes parts at least get cheaper after some time (anectodal evidence), bmw parts prices stay ridiculous forever (personal experience).
This is what I call some creative marketing manipulation - there's really nothing new or amazing here.
The loan is a normal car loan with 10% down (in fact you may be able to get a better rate with a CU instead of US Bank / Wells Fargo at around 3%).
The residual on a S Class is actually on the lower end for luxury cars (~40% ish). So the risk in the buy-back option is minimal for Tesla.
Since the Model S is still relatively small in production numbers, it will likely have a much higher residual value (I'm guessing over 60% after 3 years) unless something goes horribly wrong.
It also doesn't combine the "best aspects" of leasing and buying. They show a $284 deduction for business use, which probably assumes 100% business usage.
If I were to do the same with a lease, I could write off 100% of my lease payments... but the lease vs. buy benefit certainly depends on your business situation and usage.
What I would like to see is a real lease that could compete with BMW/Audi. Good lease offers are typically a result of cars with high residuals (like reliable Hondas or brands like BMW/Audi). You wouldn't get the $7500 tax credit with the lease, but I believe the manufacturer might get it themselves and I've seen these incentives passed down to the consumer even in leases.
Maybe we'll see it in after the car has been on the market for a few years, but by that time those big tax credits will probably be gone.
I'm not saying the tax credits won't die out, but it's unfortunate that they will.
I've seen some people saying that these subsidies are unfair, but the US government heavily subsidizes gas too.
Some very rough calculations put the average gas subsidies paid by the US government around $4350 per driver per year.
I dislike subsidies in general, but it's too bad the credit will phase out sooner rather than later. Getting plug-in electrics on the road will save the US tons of money on gas subsidies.
--------------
1.49 gallons/driver/day * 365 days * $8/gallon subsidy = $4350.8/driver/year
Using an $8 subsidy based on some quick googling, which places the true cost of gas in the US from $12-$15/gallon. Assuming an average price of $4/gallon, that puts a conservative estimate of the subsidy per gallon around $8.
No doubt. But they're likely to get plenty of Teslas on the road in the meantime, which is all they need: awareness that Tesla exists, and (theoretically) satisfied customers.
Presumably Musk is anticipating that most buyers will like the Model S enough to not sell it back; if reality lines up, Tesla comes out far ahead. If not, they're doomed, but this scheme would really only be accelerating their demise in that case.
The Model S actually seems fairly future-proof. I don't see battery tech getting much better in the next 5 years, and even if it does, it shouldn't be too difficult to replace the battery, controller, etc. with new technology in that timeframe. If they can move the industry away from "My 2006 Audi is still a mechanically nice car, but the nav system is horribly dated, so I'd consider replacing the whole car to get a better nav system in a few years", to one where you can more readily upgrade components (vs. just replace with identical parts, or go into the aftermarket world which only really exists for high volume models), that would be a big improvement.
Especially if the battery pack needs replacing after 8-10 years, it seems like it would be worth upgrading it at 6+ years with a 30% better-than-new pack, assuming technology has improved by then.
Agreed - the Model S looks like the first Macbook/Pro unibody from 2008. What would later become an iconic style, and that model is still supported through OS upgrades 4 years later. Still resells for ~40% of original price after all this time.
A wise investment considering the alternative products. A 43% resale value buyback isn't too shabby, but my guess is the model S would be worth more than that in 5 years.
This is a slight spin on leasing, but it's a good one. I love the boldness of Musk's leadership with Tesla. Ready to go out on a limb and try new things. Clever way to ensure that tax breaks still happen, but gives confidence to the customer over things like battery life. It also allows Tesla to control the resale market for their product, as I am fairly sure folks buying a second-hand Tesla will want one where the battery has been fully refurbished by the Tesla factory team.
If you look at Tesla's ambitions - to start at the high end, experiment there then bring the innovations to the broader market - this could prove to be a much bigger change than it appears. Plus, lease-type mechanisms like this can lead to a significant greening of the auto industry over time if such arrangements take hold.
Here is a pretty good approximation of what a normal person would be able to claim (to themselves) about the actual cost of owning the 85kWh. Comes to $940 a month of actual cost. This type of advertising is obviously very misleading.
this ought to be called the "Screw the Government" financing plan. It's advantageous to the purchaser, yes, but only incidentally to it's real purpose which seems to be the maximize the tax advantage / subsidy provided by local, state, and federal governments in the US.
They are trying very hard to position Tesla away from the Rich and Famous market segment. This new financing program isn't so much intended to increase sales of the Model S (which is oversubscribed IIRC) as it is to work out the kinks for the lower-end cars coming in a couple of years. And expand the market of people who can and should be considering Tesla vehicles.
[+] [-] therealarmen|13 years ago|reply
You aren't qualified for the $7,500 federal tax credit if you lease a vehicle, only if you buy. For many first-time EV owners, buying is a big leap of faith. It's a new technology and no one knows for sure where battery tech will be in 10 years. Many drivers would prefer to lease but don't get the tax benefits of purchasing, so instead they decide to stay on the fence.
Tesla just pushed them off the fence.
[+] [-] tc|13 years ago|reply
Elon Musk is great. He's always all-in.
[+] [-] Shivetya|13 years ago|reply
Then to top it off, all with my money too boot! So for everyone who can afford a one thousand dollar monthly lease; before taxes; they get my help to pay for it.
Sorry, he is all in with our help. That isn't exactly courageous. He wants to capitalize on that tax credit before the money ends up elsewhere.
Look, I am all for having an electric car do well, but I would much rather finance the world of Leafs and similar affordable cars than a luxury vehicle to people who could make the payment regardless. People on sites like this bitch up a storm all the time about subsidies to various businesses but somehow this one gets a pass.
[+] [-] hkmurakami|13 years ago|reply
Not only is this story a great business and strategic move, it has an added bonus of marketing/PR/goodwill + hiring benefits.
There's probably a lot we can all learn from the kind of decisions/announcements that are continuously being made from Elon Musk and Tesla.
[+] [-] nhangen|13 years ago|reply
[+] [-] jcampbell1|13 years ago|reply
It is really interesting to see balloon/option loans coming back, but for a different reason.
As far as I know, no bank does leases and only the captives do them. In this case, you owe wells fargo for the full amount of the loan, but Tesla and Musk are personally guaranteeing to buy the car back. A clever way to create a lease product backed by a company that won't do leases.
[+] [-] paul_f|13 years ago|reply
[+] [-] vl|13 years ago|reply
But this article is really light on details:
1) Is put option available without the loan?
2) Is it available for longer than 36-month period?
If I decide to buy Tesla, it's unlikely I'm going to be replacing it in 3 years, more like 6-8 years. And I think that there is a good change that in 6 years resale value will be 0 - with more advanced battery tech available and with cheaper models around, and with old battery Model S may turn out to have no value in 6 years. So this kinda stops me from considering it.
[+] [-] jstalin|13 years ago|reply
[+] [-] mikemoka|13 years ago|reply
[+] [-] klochner|13 years ago|reply
[+] [-] tokenadult|13 years ago|reply
[+] [-] SilasX|13 years ago|reply
[+] [-] damoncali|13 years ago|reply
[+] [-] MikeCapone|13 years ago|reply
https://www.youtube.com/watch?v=twC1d-HEfJw&list=UU5WjFr...
[+] [-] Bromskloss|13 years ago|reply
[+] [-] SandersAK|13 years ago|reply
Musk is betting that the car will be so good that people will want to keep it.
If it's true, then buyers are getting a great deal and Tesla wins with a lot of cars on the market, and in turn, a lot of leverage to get their charging stations all over the place.
If it's not true, then it all goes to hell over a year period where people are returning them and Tesla is buying them back.
Musk is basically saying "there is nothing better than a Tesla, and I am willing to bet the farm on it."
[+] [-] 2arrs2ells|13 years ago|reply
Or that Tesla can sell "certified pre-owned" models for > the cost of the buyback.
[+] [-] shin_lao|13 years ago|reply
Also as another HNer remarked, don't forget there is probably a second hand market.
[+] [-] josephpmay|13 years ago|reply
[+] [-] manacit|13 years ago|reply
Admittedly, it ends up being a lot more if you don't live in California, drive a car that gets a more reasonable MPG, etc. Whether it will turn people away or lead people to doing the research themselves remains to be seen.
[+] [-] cbr|13 years ago|reply
[+] [-] sinak|13 years ago|reply
Edit: Based on DanielStraight/Tesla's numbers below (43% RV) that'd be a residual value of $31420 on the base model, with a penalty of $0.25 on each mile over 36k.
Tesla's True Cost of Ownership page has more:
http://www.teslamotors.com/true-cost-of-ownership
[+] [-] DanielStraight|13 years ago|reply
http://www.teslamotors.com/sites/default/files/pdfs/tesla-re...
The guaranteed resale value is 43% and there's a penalty of $0.25 per mile for each mile over 36000 (58000 km).
[+] [-] johnward|13 years ago|reply
[+] [-] unknown|13 years ago|reply
[deleted]
[+] [-] codex|13 years ago|reply
The main advantage of a traditional lease is an extremely low monthly payment: the lessee only pays for the depreciation on the car plus interest on the entire purchase price.
Tesla's product does not offer this, because it's simply a five year loan. Rather than for paying for 40% of the car over three years, you pay 100% over five, so the monthly payment will be roughly 50% more than with a real lease.
Why can't Tesla offer a real lease? Because no bank wants the risk on fundamentally new type of car. Normal leases are financed by banks with the car as collateral at the end of three years; this allows the bank to take the risk of much lower principal repayments over the first 36 months. Usually the car's residual is struck low enough to make this a good deal for the bank. However, banks balked at taking the Tesla Model S as collateral, because there's extreme uncertainty about how valuable these cars will be in three years--for example, if there's a breakthrough in battery technology, or if the batteries themselves don't last very long, or the car proves unreliable for other reasons, the final collateral could be worth much less than estimated.
Ideally Tesla would sell the cars to themselves, claim the $7500 tax credit themselves, and pass the savings onto the lessees via lower lease rates, essentially acting as their own bank (many car companies do this, like Nissan with their LEAF and Ford with the Focus Electric). However, Tesla doesn't have the cash or assets to do that. They need to put all of their cash into operations and can't loan it out, and they don't have enough profit for them to take advantage of the tax credit.
So who takes the risk? The customers. They must make 1.5x higher monthly payments even if they plan to sell the car back, and they're taking a risk that Tesla (or Elon) will be around in three years to honor the buyback price. Furthermore, customers cannot sell the car or the guarantee is lost; it's not transferable to a new owner. Tesla is gambling that they'll have the cash to honor the buyback prices even if the car turns out to have massively depreciated. If the car depreciates massively, Tesla may not be around anyway, so it's a good risk for the company. Likely the residual value is struck low enough (~45%) that they can probably resell the cars without a loss in the expected case, even though that number is still too risky for banks to go for.
Kudos to Elon for personally guaranteeing the resale value; that takes some cojones.
[+] [-] phillco|13 years ago|reply
Parts are a little surprising (e.g. it assumes your time is worth $100/hour).
[+] [-] tokenadult|13 years ago|reply
http://247wallst.com/2013/04/01/teslas-awful-sales-news/
That results in "ridiculous numbers"
http://www.businessinsider.com/can-you-really-get-a-tesla-mo...
in Tesla's latest financial claims.
[+] [-] JumpCrisscross|13 years ago|reply
Start with Elon Musk personally backing the repurchase agreement. Was the bank unwilling to to take this risk? Why could they believe they can't securitise the risk? Granted this is U.S. Bancorp and Wells Fargo we're talking about. Will the risk live on Tesla's balance sheet? The silver lining would be the clarity investors will get into the assumptions that went into pricing the put.
Why we are already talking about financing? Wasn't the plan to improve accessibility by driving down prices through increasingly mass market models? Who is the marginal customer who balked at the cash price but is shifted by this? The one who doesn't have the cash? Or couldn't get a bank loan? These customers are probably less credit-worthy than Tesla's cash customers. The repurchase agreement is a callable loan to borrowers willing to fund a large discretionary purchase with debt. This will come home to roost if U.S. growth and thus incomes tank and erstwhile enthusiastic greenies start seeing their vroom vrooms as piggie banks.
We know that part of what pushed Tesla into profitability was its re-working of its DoE loan. Is this a way to pull forward sales? How are these "leases" accounted for when they're made? I'm keeping an eye open for if they recognise the full value of the sale, less an ignomiously small loss reserve, upon signing.
Comparatively minor but still irking me: why is Elon Musk implying his credit is better than Tesla's? Tesla has more loss-absorbing capital. Given the amount of Musk's net worth tied up in Tesla, his credit has a high correlation with Tesla's. I get that this is more a marketing stunt, but the emptiness is disappointing. Then again, I would have probably railed at Steve Jobs in 1998, too.
[+] [-] johnrgrace|13 years ago|reply
[+] [-] bradleyjg|13 years ago|reply
The guaranteed buyback is the special sauce here. So I'd want to see exactly what's involved. Are there lease type conditions on miles driven? Exorbitant charges for minor damage? The small print is rather important.
As for lining up banks to agree to financing subject to approved credit, it's fairly meaningless. Someone will always lend you money subject to approved credit.
[+] [-] encoderer|13 years ago|reply
[+] [-] jusben1369|13 years ago|reply
[+] [-] zalew|13 years ago|reply
[+] [-] manav|13 years ago|reply
The loan is a normal car loan with 10% down (in fact you may be able to get a better rate with a CU instead of US Bank / Wells Fargo at around 3%).
The residual on a S Class is actually on the lower end for luxury cars (~40% ish). So the risk in the buy-back option is minimal for Tesla.
Since the Model S is still relatively small in production numbers, it will likely have a much higher residual value (I'm guessing over 60% after 3 years) unless something goes horribly wrong.
It also doesn't combine the "best aspects" of leasing and buying. They show a $284 deduction for business use, which probably assumes 100% business usage.
If I were to do the same with a lease, I could write off 100% of my lease payments... but the lease vs. buy benefit certainly depends on your business situation and usage.
What I would like to see is a real lease that could compete with BMW/Audi. Good lease offers are typically a result of cars with high residuals (like reliable Hondas or brands like BMW/Audi). You wouldn't get the $7500 tax credit with the lease, but I believe the manufacturer might get it themselves and I've seen these incentives passed down to the consumer even in leases.
Maybe we'll see it in after the car has been on the market for a few years, but by that time those big tax credits will probably be gone.
[+] [-] archon|13 years ago|reply
Seems like this whole scheme will unravel as soon as those tax credits die out, which they will.
[+] [-] zefhous|13 years ago|reply
I've seen some people saying that these subsidies are unfair, but the US government heavily subsidizes gas too.
Some very rough calculations put the average gas subsidies paid by the US government around $4350 per driver per year.
I dislike subsidies in general, but it's too bad the credit will phase out sooner rather than later. Getting plug-in electrics on the road will save the US tons of money on gas subsidies.
--------------
1.49 gallons/driver/day * 365 days * $8/gallon subsidy = $4350.8/driver/year
Gallons/day: http://en.wikipedia.org/wiki/Gasoline_and_diesel_usage_and_p...
Using an $8 subsidy based on some quick googling, which places the true cost of gas in the US from $12-$15/gallon. Assuming an average price of $4/gallon, that puts a conservative estimate of the subsidy per gallon around $8.
Federal credit phase out info: http://www.irs.gov/Businesses/Plug-In-Electric-Vehicle-Credi...
[+] [-] ConstantineXVI|13 years ago|reply
Presumably Musk is anticipating that most buyers will like the Model S enough to not sell it back; if reality lines up, Tesla comes out far ahead. If not, they're doomed, but this scheme would really only be accelerating their demise in that case.
[+] [-] metageek|13 years ago|reply
[+] [-] rdl|13 years ago|reply
Especially if the battery pack needs replacing after 8-10 years, it seems like it would be worth upgrading it at 6+ years with a 30% better-than-new pack, assuming technology has improved by then.
[+] [-] r00fus|13 years ago|reply
A wise investment considering the alternative products. A 43% resale value buyback isn't too shabby, but my guess is the model S would be worth more than that in 5 years.
[+] [-] josh2600|13 years ago|reply
Quite the start to April for Tesla.
[+] [-] sounds|13 years ago|reply
http://techcrunch.com/2013/04/02/downtown-project-buys-100-t...
[+] [-] richardjordan|13 years ago|reply
If you look at Tesla's ambitions - to start at the high end, experiment there then bring the innovations to the broader market - this could prove to be a much bigger change than it appears. Plus, lease-type mechanisms like this can lead to a significant greening of the auto industry over time if such arrangements take hold.
[+] [-] hojoff79|13 years ago|reply
http://blogs.wsj.com/corporate-intelligence/2013/04/02/the-s...
[+] [-] gcb0|13 years ago|reply
"We changed the name of a lease, so people leasing a 1500/month car can get a free $7000"
Also "we can say a $1500 lease only costs $500, because marketing and stuff"
[+] [-] mark212|13 years ago|reply
They are trying very hard to position Tesla away from the Rich and Famous market segment. This new financing program isn't so much intended to increase sales of the Model S (which is oversubscribed IIRC) as it is to work out the kinks for the lower-end cars coming in a couple of years. And expand the market of people who can and should be considering Tesla vehicles.